As a landscaper, you understand the value of solid foundations and long-term growth. The same principles apply when you're looking to invest in real estate, particularly when buying an investment property like a unit or apartment. Let's walk through what you need to know about investment loan options and how a finance and mortgage broker can help you access the right funding.
Understanding Investment Property Loans
When you're buying a rental property, the loan structure differs from your standard home loan. Investment loans typically come with:
• Higher interest rates compared to owner-occupier loans
• Different loan to value ratio (LVR) requirements
• Specific rental property loan features designed for investors
• Various options for both variable interest rate and fixed interest rate products
As landscapers often have variable income patterns due to seasonal work and project-based earnings, having a finance and mortgage broker who understands your industry can make the application process much smoother.
Choosing Your Investment Property Type
Units and apartments can be excellent choices for your first investment property. Consider these options:
• Apartment: Often located in established areas with good rental demand
• Town house: Provides a middle ground between units and stand alone dwellings
• Stand alone dwelling: Typically offers more land value but requires higher loan amounts
When you research property options, focus on areas with strong rental yield potential and growth prospects that align with your investment property strategy.
Key Financial Considerations
Loan to Value Ratio (LVR)
Most lenders require a maximum 80% LVR for investment loans to avoid lenders mortgage insurance (LMI). This means you'll need at least a 20% deposit plus additional costs.
Additional Costs to Budget For:
• Stamp duty (varies by state)
• Legal and inspection fees
• Ongoing property management costs
• Insurance and maintenance
Calculating Investment Loan Repayments
Your repayments will depend on the loan amount, investment loan interest rate, and loan term. Many landscapers benefit from interest-only repayment options initially, which can help with cash flow while establishing the investment.
Maximising Your Borrowing Capacity
Lenders assess your borrowing capacity based on several factors:
- Income verification: As a tradie, you'll need recent tax returns and banks statements
- Existing debts and expenses: Including your current mortgage and business expenses
- Rental income potential: The expected rental yield from your investment property
- Credit history: A solid credit record supports your investment loan application
Your finance and mortgage broker can help present your financial position in the strongest light to lenders across Australia.
The Investment Loan Application Process
Applying for an investment loan involves several steps:
• Pre-approval: Get an indication of your borrowing power before property hunting
• Property selection: Choose a property that meets lender criteria
• Formal application: Submit detailed documentation including banks statements, tax returns, and property details
• Valuation and approval: The lender conducts their assessment
• Settlement: Complete the purchase with your solicitor
Many brokers offer a streamlined application process that can save you time and help you access investment loan options from multiple lenders.
Tax Benefits and Negative Gearing
One advantage of investment property ownership is negative gearing, where your property expenses exceed rental income, potentially reducing your taxable income. Common deductible expenses include:
• Loan interest payments
• Property management fees
• Maintenance and repairs
• Insurance and council rates
Always consult with a qualified accountant about your specific tax situation and how it fits into your broader property investment strategy.
Building Your Investment Property Portfolio
Many successful investors start with one unit and gradually expand their investment property portfolio. Your first investment property can provide:
• Rental income to offset costs
• Capital growth over time
• Equity for future investments
• Tax benefits through negative gearing
The property market can provide landscapers with additional income streams that complement seasonal variations in trade work.
Finding the Right Interest Rate
Investment loan interest rates vary between lenders, and many offer interest rate discounts for larger loan amounts or existing customers. Your mortgage broker can help you compare options and potentially negotiate better terms based on your overall financial profile.
Some lenders also offer specific programs for tradies that recognise the unique aspects of self-employed income in the trades industry.
Investing in property as a landscaper can provide long-term financial security and additional income streams. With the right investment loan and property choice, you can build wealth while continuing to grow your trade business.
Call one of our team or book an appointment at a time that works for you. Let Tradie Home Loans help you explore investment loan options and find the right solution for your property investment goals.
